The bulls were on the rampage on Dalal Street on Monday, with the BSE Sensex hitting a lifetime high to close above the 22,000-mark. The rally was driven by pre-election optimism of a stable government. It was also aided by heavy short-covering and strong FII flows.

The Sensex rallied 300 points, or 1.38 per cent, to end at 22,055, supported by the banking and oil and gas indices, which surged 3 per cent and 2.46 per cent, respectively.

The Nifty also hit a lifetime high and settled at 6,584, up 89 points or 1.4 per cent.

According to exchange data, FIIs’ net investment in the markets on Monday stood at ₹1,465.62 crore.

Strong rupee

Strong foreign inflows boosted the rupee to an eight-month high, with the currency recording a 14 paise gain to close at at 60.78 to the dollar.

“The markets are factoring in a strong positive mandate in the outcome of the upcoming general elections. Moreover, domestically a key positive is that headline inflation has eased considerably during February,” said Lalit Thakkar, MD, Angel Broking.

According to Alex Mathews, Head-Research, Geojit BNP Paribas Financial Services, the Government’s disinvestment programme, which has garnered about $3.1 billion so far, would help reduce the fiscal deficit.

Broader markets quiet

The large-cap rally notwithstanding, broader markets were silent with the BSE Midcap and Small-cap indices closing 0.13 and 0.15 per cent higher, respectively.

“The market breadth was weak with thin volumes,” said Suresh Parmar, Associate Vice-President of Institutional Equity, KJMC Capital Market Services.

However, cautioning investors from getting carried away by the market highs, Parmar added: “Retail investors and small traders should wait for a strong correction as buying at current levels would be risky given the FII-driven rally.”

(This article was published on March 24, 2014)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.